Abstract: The concept of the Asian developmental state has been theorized and discussed for a few decades already while a substantial part of literature is dedicated to the liberal reforms and democratization taking place in late 1980s. A special attention is drawn to the Asian financial crisis 1997-98 which reinforced neo-liberal agenda and provided an additional political opportunity to the local liberal elites as well as international agencies thereby accelerating deregulation of industrial policies and developmental institutions. At the same time, if to look at administrative and regulatory reforms in South Korea which started in the 1980s, i.e. well before the crisis, the evolutionary nature of developmental institutions becomes evident while the analysis of post-crisis reforms enables to point out its adaptability. In order to position these empirical findings inside theoretical discussion on the ‘East Asian model’ and its transformation in the course of liberalization, the concept of policy capacity is brought: it is suggested to go beyond ‘conventional’ state-centric model of developmental state and to view East Asian economic development, the one of South Korea in particular, through the continuity (or discontinuity) of (development-oriented state-led policies) policy capacity thereby emphasizing evolutionary nature of developmental state.